Somalia's beleaguered population received a further blow today when the World Food Programme announced it was suspending operations in the south of the country owing to "unprecedented and inhumane attacks" and threats and demands by a hardline Islamist group.

The WFP said that 1 million people, nearly all of them in areas run by the al-Shabaab militia, would no longer receive food rations.

Besides the insecurity problems, the Shabaab had demanded that the UN agency remove all women from their jobs and pay $20,000 (£13,000) every six months for "security" in some of the region's controls. When the WFP refused, it was given a deadline of 1 January to cease operations.

"The unacceptable demands and harassment of our staff have made it impossible to continue reaching many of the most vulnerable people in southern Somalia," said Peter Smerdon, spokesman for WFP.

The agency said it would continue to provide assistance to 1.8 million people in the capital Mogadishu and elsewhere in the country.

After nearly two decades without an effective government, Somalia is heavily reliant on food aid. The WFP says only 30% of the country's needs have been met from local production in the past five years. Aid is crucial to fill the gap as commercially imported food is too expensive for many Somalis, especially those displaced by the conflict, and access to rebel-held areas is difficult and dangerous for transporters.

At least four WFP staff have been killed in the last 18 months, and several of the agency's offices have been attacked.

The WFP said it was "deeply concerned about rising hunger and suffering" that would be caused by the suspension, and hoped the situation would be temporary. Contingency plans have been made in case of large movements out of the affected areas.The Shabaab, which is accused of having links to al-Qaida and shares some ideological traits with the Taliban, has only been thwarted in its attempt to overthrow Somalia's government by the presence of African Union peacekeepers in Mogadishu.

Until recently, the militia had allowed the WFP to work in areas it controls, and the rebels' structure and organisation even helped delivery in some areas. But recently the Shabaab began claiming that food aid was hindering local farm production. One aid worker said it also appeared as though the militia's hierarchy had instructed each of its local administrations to collect money to sustain is operations.

Late last year, in the Bay and Bakool areas, aid agencies were informed of the $40,000 annual security fee, and 10 other rules to comply with. In keeping with its radical interpretation of Islam, the Shabaab said female aid workers would only be allowed in hospital and healthcare centres.

• This article was amended on Wednesday 6 January 2010. We said Somalia is heavily reliant on food aid after nearly two decades with an effective government - we meant, of course, without an effective government. This has been corrected.